In StumblingUpon the internet, you’ll come across some interesting graphs and charts that really open your eyes to what has been happening. How bad is this particular stock market slump? I’d say bad enough to make charts and graphs really jump out at you. At the beginning of this blog’s existence back in the prehistoric times, I had been charting my monthly investment ups and downs. Due to recent extenuating circumstances, I’ve slowed a bit on that passion.

Not only because it would only change a percentage point or 2 each month, and really only needs to be looked at about once a quarter or maybe a couple times a year if you’re planning for the long haul. It takes some gandering, but not too much or you can get distracted by what’s happening to it, and ultimately your long-term goals with it.

That being said, I still will look at mine, but haven’t yet felt we’ve hit rock bottom, and at which time I’m going to show my downward spiral (as most everyone else has taken the same path, but actually have it documented to see just how bad it hit). As of today, we’re looking at about a 35% drop across my board 401k, ROTH, Traditional for my long term accounts and that’s actually BETTER than some (worse than others), let me know yours in the comments.

The basis of this post was the following chart though I found on DailyKo here:

“On this chart each block represents a year and each column represents a range of return on the S&P index. Over on the right side are those lucky years where the index has soared upward from 50-60%. In the middle are the more typical years, where the market has risen less than 10%.

That little box on the far left? Yeah, that’s this year.

The chart (the idea for which comes from a similar chart prepared by Value Square Asset Management, Yale University) has a wealth of interesting information. Because the S&P is a much broader index of market activity, it’s not quite as prone to crazy moves as the Dow. It’s also not as easily manipulated by the “let’s just trade out these exhausted brands for a couple of up and comers” means by which the Dow’s value is sometimes inflated.”

Obviously all charts can be skewed and setup to match the pattern that the chart maker wants you to see, but they’ve just displayed it in a way that points out things we already knew, in a format that we haven’t seen. An interesting piece to note is the years right after The Great Depression – it’s gained some of the biggest numbers right afterwards. We want to be in it right? Well, you tell me when that magical year is going to be and we’ll chat.

During the Great Depression, we fell pretty consistently until Roosevelt’s New Deal in 1933 (and then dipped again in 1937), but take a look how that took about 4 years to dig ourselves out of it. That’d put us somewhere around 2012 until we got back on our feet if past experiences are any indication of future results.

There is something out there that is ripe for the picking in times of financial strife, finding that niche is where you’ll make your best buck. If you’ve got an idea to sell, I’m willing to listen as I’ve got a few bucks looking to find somewhere to put it. Where are you looking to invest in the next 4 years?

If you really research an unbiased report of the New Deal, you will see that the New Deal did not get us out of the depression but it prolonged the depression by not letting out economy naturally correct. Getting into a world war is what got us out of the depression.

We are doing the same thing now with government propping up businesses and other areas of the economy. All we are doing is prolonging the pain, which will lead to ultimately worse conditions.

Don’t look for a stock market bottom yet. I think we get a short term rally for next few months, then sometime next year take a big drop lower again.

Hey, I really enjoy the blog, I just started mine a couple of months ago and we appear to have a similar mentality. Maybe it’s a northwest thing – are you still in Seattle? I’m a process engineer out of Kent.

As far as Kevin’s comment it’s hard to say this market will follow the same pattern of the Great Depression at all considering we’ve already hit the hard down turn. Though I agree with you that the New Deal didn’t help the situation and we’ll likely mimic that pattern again.

The great part though is we there is more information out there than ever before and we can find a way to profit now in any market for those who are willing to look hard enough.

@Kevin – Eh, that’s a debate that will rage on till the end of time. Some would argue that the New Deal didn’t have time to turn a country around. Yea, it had 7 years of 2 versions passed, but 7 years is hardly enough time to turn something around. WW2 certainly jumpstarted our economy, but the programs that FDR was putting in were just starting to see real face time.

I don’t think we’ve seen the end of the recession either; additionally I don’t think that we should be bailing out everyone and their mom. They’re saying that if “x” falls, then “y” and “z” will most certainly fall, etc… But they’re thinking immediately. Something always comes up in its stead. If there isn’t enough money to keep a business up, what’s another few billion gonna do for it?

I think it is going to get much worse before it gets better. This economy is like one I have never seen in my short lifetime. Interesting though. The challenge is to keep your cool, try to understand some history about the similarities and differences in what we face now compared to what we faced then; and with some foresight… make wise investment choices.

I believe that there are many opportunities to buy into businesses or increase current holdings at discounted prices but its going to take some work to find just the right opportunities.

That is a great graph! And who at some time hasn’t looked back at premise of how much money was made by those who invested coming out of the great depression?

But though we have had a great investing year since March ’09, the reality is what rising interest rates will do to the recovery, and how far they will have to go to control intense inflation which could come as early as next year.

Higher rates means money flowing out of the markets, just like lower rates forces money into the markets.

Disclaimer

I am not a financial expert. I am good with my money and I would like to be able to someday give better financial advice to my kids than I got when I was young. Don't take anything I say as GOLD. Take it with a grain of salt and form your own opinion of how you should use your money.